In wake of report, Manchester aldermen may keep economic development office separate from mayor's office

MANCHESTER — The aldermen are poised to maintain the economic development office as a separate department, reversing an earlier decision to fold it into the mayor's office.

The joint Committee on Human Resources and Insurance voted 6-2 Monday to recommend the office continue to function as a department. The aldermen could vote as soon as this evening on the proposal.

The vote came after the release of a report by the city's independent auditor, Kevin Buckley. He found a number of problems, including missing records, nearly $65,000 in checks and cash that were not deposited, and a lack of evaluation of programs at the Manchester Economic Development Office, known as MEDO until its dissolution earlier this year. Buckley attributed many of the issues to the office being short-staffed.

Monday night's vote was something of a rebuke to Mayor Ted Gatsas, who enthusiastically took on the functions of MEDO following the abrupt resignation of its chief, Jay Minkarah, in November. The other official in the office, Chris Wellington, left in February.

Gatsas had maintained that his office was well-suited to oversee the goals of job creation and bringing business to Manchester; he questioned the usefulness and expense of having an economic development chief.

Ward 3 Alderman Pat Long, who has played a large role in economic development affairs, had originally backed the mayor's position, but then came to advocate keeping the office intact, apparently in response to concerns raised by representatives of the Greater Manchester Chamber of Commerce and other members of the business community.

At Monday's meeting, Gatsas said, "Some in the business community didn't think it was the right thing to do, but I can tell you, after being in my office the past six months, I think it was the right thing to do," he said.

No natural fit

Long's earlier proposal entailed hiring two economic development staffers and having them serve under the mayor. Several aldermen expressed concerns that economic development would become politicized and that the office would turn over with each new administration.

As for placing the division within another department, such as the city' clerk's office, Alderman-At-Large Dan O'Neil said there appeared to be "no natural fit."

Ward 2 Alderman Ron Ludwig noted that the clerk's office and the planning department played a "regulatory role" in issuing permits, and this would pose a conflict for an office whose mission was to champion businesses.

Ward 10 Alderman Phil Greazzo has been a strong advocate for eliminating the department. Pointing to the audit report, he said at Monday's meeting, "We can look at the department and see it already was a failed department. What we're doing now is going through the motions of bringing a failed department back," he said.

Ludwig drew a different conclusion from the report — that the aldermen had failed to properly monitor MEDO and staff it.

"This office has to have our support," he said. "We can't tell the guy to take a taxi to Philadelphia because it's cheaper than a flight."

Independent audit

The independent audit was launched at the request of the aldermen following the departure of Minkarah. The report examined the performance of the office since 2010 until March of this year.

Of particular concern was the Revolving Loan Fund, which provides loans to small businesses with the goal of creating jobs. In the majority of 22 loans reviewed, there was a lack of documentation concerning job creation. In addition, fees weren't being assessed for late payments, some borrowers were allowed to go months without making a payment, and minutes were not kept at RLF committee meetings, according to the report.

Buckley noted that the report was hampered by the lack of any remaining staff from the office.

The report was not all critical. Buckley said the office could point to a number of projects in which it played a role, such as the development of the Elliot at Rivers Edge medical center and the downtown Market Basket. Many of the shortcomings in the office are related to a shortage of staff, Buckley writes, noting that in eight years, the office went from four full-time staff to just two, before the resignation of Minkarah.

"The City, through a fully staffed and functioning economic development office, is uniquely positioned to have positive and indirect impacts on the development in Manchester and the surrounding region," Buckley writes. tsiefer@unionleader.com